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22 Cards in this Set

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Price Discrimination;

The ability of consumers to buy a a higher price than the rest of the market.

What are the four types of Non uniform pricing;

Price Discrimination, Two-part Pricing, bundling, peak load bundling

Two part pricing;

One fee for the right to buy and another for each additional unit sold.`

What are the conditions to Price discriminate;

- Must have market power (Monopoly, Oliopoly, Monopolistically competitive)


- Must identify groups with different price sensitivity


- Firm must prevent resale

What at the three types of price Discrimination

Perfect Price Discrimination


Group P.D


Non Linear P.D

How does a firm perfectly price discriminate, and what does price equal;

Market power, Prevent resale, Full informatio about willingness to pay, sell each unit, charge reservation Price, Price equals MR

Group P.D vs. Perfect Comptition

Perfect Comp, Consumer surplus Inc. Causes incease in output


- Competitive Consumer Surplus transferred to firm thus creating dead weight loss due to reduced output

Group P.D vs. Single price monopoly

Block Pricing;

Charging one price for one unit of goods, then charging another for the next, Either inc or dc at your will.

Types of Nonlinear Pricing;

Between Identical Customers and Different customers.

Bundling;

Selling multiple goods and services for a single price

Two types of Bundling;

Pure and Mixed

What two types of games can there be

Static or dynamic

Dominant Strategy





One that delivers a high rate of payoff. higher than any other player


Prisoner's Delima game;

Everyone has a Dominant strategy reducing potential profit

Nash Equilibrium;

No other player earn a high rate of return by using another strategy,


- Only one combination of strategies in each firms strategy is best

What are the Four Modules;

Cartel, Stackleberg, Cournot, Bertrand

Cournot;

Few firms in the market serving many people, Firm believes rival will hole their output constant

Stackleberg,

Single firm chooses their output before anyone else does in the market.

Bertrand,

Engage in Price Competition and react to other firms increase and decrease in price.

Mixed Strategy Nash Equilibrium,

Rule telling a player how to choose between pure strategies

Using a pure strategy causes what kind of Nash equilibrium,

No NASH!